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May 25 - 07:55 AM

USD/CAD - Option Premiums Flag Risk Vs Reward Of USD/CAD 1.20 Barriers

By Richard Pace  —  May 25 - 06:14 AM
  • Big 1.20 USD/CAD option barriers proving resilient - 1.2014 recent/5yr low

  • However, recoveries limited to offers mid 1.21s, defining near term range

  • Cost to bet 1.20 trades within 2-weeks is 75% of total payout, so high risk

  • But means those betting on 1.20 holding can reap reward via options

  • 2-week expiry 1.20-1.2175 double no touch (DNT) just 3% of total return

  • $30k premium for $1-million payout if neither level touched by expiry

  • Related nL2N2N50P1

For more click on FXBUZ


CAD=D3 Click here

CAD DNT option price Click here

Source:
Refinitiv IFR Research/Market Commentary

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